Chamath Palihapitiya, founder and CEO of investment firm Social Capital, told CNBC on Thursday that the broad market sell-off over coronavirus fears is like the 2008 financial crisis and 2000 dot-com bubble bust combined.
The Dow Jones Industrial Average plummeted nearly 9% on Thursday and was on pace for its biggest one-day percentage decline since the market crash of 1987. U.S. stocks did recover some of those losses Thursday afternoon after the Federal Reserve announced funding actions to combat the crisis.
“This is a very, very untested moment in our history. It’s not like the great financial crisis, it’s not like the dot-com bubble. It’s like both at the same time,” Palihapitiya, an early Facebook executive, said in a “Fast Money Halftime Report” interview. “It’s the severity and the depth of the great financial crisis and the long period of the dot-com bubble.”
“The draw down, I think tip to tail, will be as bad as the great financial crisis, except unlike it, we’re not going to see some clever, cute V-shaped recovery. We’ll see what we saw for the dot-com bubble burst, which is years of malaise,” he added.
The World Health Organization on Wednesday declared the new coronavirus a global pandemic.
President Donald Trump later Wednesday addressed the nation, though he failed to ease investor concerns of a potential economic slowdown, sending U.S. stocks plummeting.
“In the absence of massive and decisive federal intervention that creates confidence in the market, it has the potential to be a multiyear” downturn, said Palihapitiya, who’s also chairman of space stock Virgin Galactic.
Lawmakers on both sides of the aisle are now scrambling to take action to combat the rapidly-spreading virus.
Trump on Wednesday also asked lawmakers to consider implementing payroll tax relief as part of the U.S. economic response.
Last week, Trump signed into law an $8.3 billion emergency funding bill to help combat the outbreak.
Palihapitiya said he thinks the markets still have the worst to come, especially if federal measures don’t come through. “I suspect we’re not near the lows.”
Originally published at CNBC